Same just happened to me. Wow. BEYOND frustrating!
iPhone Xs iOS 14.4.2
Hours spent creating, grouping, and placing folders with 90% of apps in about 30 - 40 different folders, with widgets grouped and organized as well. Allows me to get to what I need, when I need it, quickly & efficiently.
Tried to add a couple of widgets (larger ones) and suddenly a bunch of folders just disappeared with the apps dumped in no order I can discern everywhere. I literally just could not find "Settings" just to confirm my iOS version!
This will take at least a couple of hours to fix and everything is now a mess -- like a bomb went off and scattered apps everywhere.
Holy cow...what a headache.
BANDAID SOLUTION for anyone reading this -- will likely be to restore the backup my phone did to iCloud about 5 hours ago.
Not much has happened in 5 hours, so should restore where things were and will be MUCH faster than recreating all the organization over again.
Note for Dev: The previous ability to update folders / apps installed & organization via iTunes was helpful -- much easier to click and drag with a mouse than to do it all with fingers, one screen at a time, with the device jumping around trying to anticipate where you are going to "land" with whatever you are holding & moving.
Lastly, would be helpful to see a link to the public community forums on this topic -- I landed on this thread first when I searched for this issue.